Grassley looking for ways to reinstate biodiesel tax credit

Since a federal tax credit on biodiesel fuel expired nearly 11 months ago, most biodiesel plants in Iowa and nationwide have shut down as the fuel can’t compete with petroleum-based diesel. As Congress returns to work this week, Iowa Senator Chuck Grassley says they’ll be considering ways to reinstate the dollar-a-gallon biodiesel tax credit in the remaining weeks of the session, in addition to a host of other tax issues.

“When it expired last December 31st, there were 71 other tax provisions, all as non-controversial as biodiesel, that expired, so they have to be done,” Grassley says. “Then, we have some tax extenders like ethanol that will expire at the end of this year. There’s also wind provisions there that will expire.” Grassley, a Republican, says he’s also hoping to see legislative action that will prevent an enormous jump in federal income tax charges.

“We have the alternative minimum tax,” Grassley says. “If we don’t do anything by the end of the year, 22-million more Americans will have to pay the alternative minimum tax. Never expected for people but wealthy ones to pay that tax.” He notes action is also needed on estate tax provisions which will also run out at year’s end.

“It seems to me that there’s several things, including biodiesel, that drive us to take just sweeping action on taxes this fall,” Grassley says. “We ought to be doing that. I hope we will do it and all I can tell you is, the consequences if we don’t do it are even greater than what they were for biodiesel.” Some are pushing to revive the biodiesel tax credit and make it retroactive, so plants can use that additional income to reopen. Iowa had 15 biodiesel plants running at the end of 2009. All have either closed down or are still operating with a skeleton staff, after laying off most of their workforces. The tax credit was launched in January of 2005 and helped to build 150 biodiesel plants nationwide, most of which are now idle.